Canada avoids broadband duopolies, keeps line-sharing alive

After years of struggle over the issue, Canada has told its telco ISPs that …

Canada is staying with the community of nations that require their big Internet service providers to share their networks with competitive broadband companies. The country's Radio-television and Telecommunications Commission has ruled that the nation's big telcos must do so "at speeds that match those offered to their own retail customers."

"Requiring these companies to provide access to their networks will lead to more opportunities for competition in retail Internet services and better serve consumers," declared the CRTC's Chair Konrad von Finckenstein.

It has not been a smooth road to this decision. Broadband access watchers here in the United States who have been driven to distraction by our Federal Communications Commission's crazy quilt decision-making process may be somewhat consoled by the process that led to Canada's latest move.

Try to not get dizzy following this abbreviated timeline of the CRTC's rulings since 1997.

Late 1990s: The CRTC rules that cable companies and telcos do not have to ask for the agency's permission to provide DSL or DOCSIS cable Internet service. But the agency requires them to make some of their high-speed facilities available to competitors.

2006-2007: The Commission tells Bell Aliant, Bell Canada, Rogers Cable, and seven other companies to open the lines to competitors at speeds matching what they offer retail Internet service customers.

2007: At the request of three telcos, the Commission rescinds the speed matching requirement for incumbent phone carriers, "given the uncertainty regarding the regulatory framework for wholesale services arising from a proceeding, then underway, to review the regulation of wholesale services."

June, 2008: But once the decision is made, the incumbents drop their access speeds for competitive ISPs. One of the competitors, Cybersurf Corp., asks the CRTC to bring back speed-matching, which it does for Asychronous DSL.

March 3, 2009: The agency clarifies that the decision applies to hybrid copper-wire facilities.

March 11, 2009: Bell Aliant and two other telcos petition the government to rescind speed-matching yet again.

December 10, 2009: The government orders the Commission to determine whether speed-matching requirements "unduly diminish the incentives to invest in new network infrastructure in general and, in particular, in markets of different sizes," and whether "in the absence of the speed-matching requirements there would be sufficient competition to protect the interests of users."

Duopoly likely

The answer, the CRTC has now concluded, is that without speed-matching, competition in retail Internet markets would be harmed.

Bottom line—"an ILEC [telco] and cable carrier duopoly would likely occur in the retail residential Internet service market, and competition might be reduced substantially in small-to-medium-sized retail business Internet service markets. The Commission considers that, in such circumstances, retail Internet service competition would not continue to be sufficient to protect consumers' interests."

On top of this, cable companies must also open their networks by means that allow competitors to connect by a minimum number of points. "This will enable competitors to make use of the cable companies' services just as easily as those of the telephone companies," the CRTC says.

But the decision comes with several caveats. First, the big telcos will be able to charge these competitors a ten percent mark-up on network costs.

Second, the CRTC noted that it eventually expects competition between wireline and wireless broadband providers to be "sufficient to protect consumers' interests." At that point it will consider its line sharing policies yet again.

All this, of course, is in stark contrast to our FCC, which dropped line sharing in 2002. Last year the agency commissioned a study on the virtues of the policy around the world, but said little about the question in its National Broadband Plan.

Matthew Lasar / Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz.